INCOME TAXES (Tables) - OLD PlayStudios, Inc.

12 Months Ended

Dec. 31, 2020

Summary of income before income taxes

Income before income taxes by tax jurisdiction consisted of the following (in thousands):

	Year Ended December 31,
	2020		2019		2018
United States	$	8,738	$	11,164	$	4,696
Foreign		2,398		6,425		1,090
Total	$	11,136	$	17,589	$	5,786

Summary of provision for current and deferred income taxes

Provision for current and deferred income taxes consist of the following (in thousands):

	Year Ended December 31,
	2020		2019		2018
Current tax expense:
Federal	$	945	$	241	$	708
State		297		720		90
Foreign		791		665		259
		2,033		1,626		1,057
Deferred tax expense (benefit):
Federal		(3,045)		1,997		1,527
State		(748)		55		(322)
Foreign		89		297		702
		(3,704)		2,349		1,907
Income tax expense (benefit)	$	(1,671)	$	3,975	$	2,964

Summary of difference between the actual rate and the federal statutory rate

The difference between the actual rate and the federal statutory rate was as follows:

	Year Ended December 31,
	2020		2019		2018
Statutory rate	21.0	%	21.0	%	21.0	%
Foreign provision	(0.3)		(6.5)		10.2
State/province income tax	0.1		5.6		5.6
Stock compensation	(19.2)		7.5		40.1
Other effects of check-the-box election	(6.2)		0.2		—
Research credit	(11.5)		(5.9)		(24.1)
Adjustment to carrying value	(4.0)		(0.3)		(0.9)
Foreign tax credit	(9.1)		(0.7)		—
Valuation allowance	9.0		—		—
Foreign-derived intangible income deduction (FDII)	(2.7)		(1.1)		(3.4)
Non-deductible expenses-other	2.4		2.0		3.6
Foreign branch income	4.5		1.0		—
Other	1.0		(0.2)		(0.9)
Effective tax rate	(15.0)	%	22.6	%	51.2	%

Summary of deferred tax assets and liabilities

Deferred tax assets and liabilities consisted of the following (in thousands):

	December 31,
	2020		2019
Deferred tax assets:
Tax credits	$	6,882	$	3,856
Accrued liabilities		5,576		486
Stock compensation		1,457		365
Intangibles		—		40
Deferred rent		74		78
Other		276		234
Total gross deferred tax assets		14,265		5,059

	December 31,
	2020		2019
Less: Valuation allowance		(1,002)		—
Total deferred tax asset		13,263		5,059
Deferred tax liabilities:
Intangibles		185		—
Property and equipment		12,457		8,123
Prepaid taxes		482		365
Total deferred tax liabilities		13,124		8,488
Deferred tax asset (liability), net	$	139	$	(3,429)

Summary of reconciliation of the total amounts of deferred tax asset valuation allowance

The following is a tabular reconciliation of the total amounts of deferred tax asset valuation allowance (in thousands):

	December 31,
	2020		2019
Balance at beginning of period	$	—	$	—
Charged to provision for income taxes		1,002		—
Other		—		—
Balance at end of period	$	1,002	$	—